The mineral scramble that led to some rare alliances

Ian MacKinnon December 30, 2010

SOUTH KOREA has struck a deal with Burma to develop its natural resources in the latest bid by industrialised nations to secure new sources of rare earth metals to beat China's near-monopoly.
The minerals are vital for numerous high-tech products, including smartphones, hybrid car batteries, computer discs and guided missiles.
Most countries have had supplies squeezed as China, the producer of 97 per cent of the world's rare earth elements, restricted exports this year.
China said this week it would cut exports by a further 11 per cent in the first few months of next year.
That South Korea should be doing business with a pariah state such as Burma is a measure of the panic export restrictions have created among big producers of electronic goods. In September Beijing halted supplies to Japan, which takes 60 per cent of its rare earth exports, after a diplomatic spat over the arrest of a fishing boat captain in disputed Japanese waters.
Concern that stockpiles of rare earth minerals could run out by March prompted Tokyo to explore a deal with Vietnam to mine the metals. Beijing denied any official ban on exports to Japan, but figures show it cut export quotas by 72 per cent in the second half of the year. Prices increased sharply.
This spurred the US to reopen rare earth mines. A Californian mine, closed in 2002 due to environmental concerns and low prices, has recently reopened but will take two years to reach full production.
Chen Jiazuo, a metals research analyst at Beijing Antaike Information Development Company, said the export cuts were ''in line with government officials' comments that we need to protect the environment and resources. Controlling domestic production capacity, output and exports will continue to be the theme.''
Curbing exports may further exacerbate tensions with the US, which last week said it may file a complaint at the World Trade Organisation over restraints on supplies of the minerals.
Rare earth minerals are 17 chemically similar elements, including neodymium, cerium and lanthanum. Neodymium oxide, used in BlackBerrys, costs $US88.50 a kilogram - more than four times its price in 2009. Telegraph, London

http://www.smh.com.au/business/the-mineral-scramble-that-led-to-some-rare-alliances-20101229-19a8k.html